Falling cashew exports raise hardship

Cashew nut farmers and traders in Guinea Bissau have been left holding tonnes of produce after India slashed imports, and the low prices being offered are increasing hardship in the coup-prone West African country.

“All of us - the farmers association, cashew nut producers and other operators - are trying to find a solution to this cashew nut export crisis,” said Mama Samba Embalo, the head of the Guinea-Bissau Farmers Association. “If we sell the cashew nuts at low prices, traders will not have the money to repay their bank loans.”

India, the top importer, has increased its domestic production. By July this year, exports reached 60,000 tonnes of cashew nuts compared to more than 100,000 tonnes by the same time in 2011, he said.

The proposed benchmark price of 250 CFA per kilogramme was not respected and prices fell as low as 100 CFA (around 20 US cents). Some 120,000 tonnes of cashew nuts are still stockpiled and awaiting buyers, said trade director Diamantino Cô.

The April 12 coup that overthrew interim Prime Minister and presidential candidate Carols Gomes Jr, and interim President Raimundo Pereira also disrupted cashew trade, increasing insecurity and making buyers reluctant to travel in the country.

The expected fall of world cashew prices due to the European debt crisis will also slow Guinea-Bissau’s economic performance in 2012, with inflation growing as a result of rising prices for imported goods, the African Development Bank (AfDB) said earlier this year.

Guinea-Bissau is the world’s fourth largest exporter of cashew nuts, which bring in more than $60 million a year. The sector employs over 80 percent of the 1.6 million people and plantations cover nearly half the country.

It is also one of the poorest nations in the world and is ranked at176 out of 187 countries in the 2011 Human Development Index.

The staple food is rice and although Guinea-Bissau produces 40,000 tonnes per year it has to import 80,000 tonnes more to meet domestic demand and is frequently hit by food insecurity. Food costs have already risen. The price of a kilogramme of prime beef steak has risen by 1,000 francs to 3,500 CFA (about $7) and that of rice has almost doubled to 400 CFA from 250 CFA.

Although Guinea-Bissau produces rice, it needs to import more to meet demand

Over the years, the benefit of cashews as a cash crop drew many farmers to convert their fields into cashew orchards and they now depend on the markets for food. Climate change, environmental degradation and an increase in the use of credit during the pre-harvest period are all contributing to a “downward spiral of food insecurity and indebtedness,” said Marina Temudo, an agronomist at the Portugal-based Tropical Research Institute (IICT).

“However, the worst food shortage will occur during next year’s dry season, after farmers have eaten up their harvests. Many cashew merchants have been unable to sell their cashews, so the future of the next purchasing campaign is compromised,” Temudo said.

Cashew farmers, who often buy rice on credit during the pre-harvest period, will have to do so at very high interest rates this time, as cashew prices will likely fall sharply, forcing them to sell part or all of their livestock at low prices, she pointed out.

The rising food costs are also affecting the poorly remunerated civil service, with some workers absconding from duty, taking up a second job, and tolerating corruption and other malpractices to make ends meet, said Heloyso da Cunha, a ministry of agriculture employee. Government workers are paid a minimum salary of 30,000 CFA (around $60) a month.

The World Bank and the AfDB suspended development operations in Guinea-Bissau after the coup in April. The AfDB put on hold the disbursement of some 6,000 euros for the final phase of the Rural Agriculture Rehabilitation Project (PRESAR) which supports improvement in the production of rice vegetables and livestock to enhance food security.

“This will affect food security in Guinea-Bissau, which already suffers chronic cereal shortages due to inadequate local production,” said Caoussou Diombéra, the PRESAR project director.

Guinea-Bissau has been plagued by coups, misrule and political instability. Since its independence from Portugal in 1974, none of its elected leaders has ever completed a full term in office. In the wake of yet another military take-over in April, key lenders have frozen funds.

The junta leaders have come under various sanctions, including travel bans and having their assets frozen. The UN Security Council and the Economic Community of West African States have imposed restrictions on the coup leaders, while the African Union suspended the country from the pan-African bloc.

The country is also a major hub for drug trafficking, especially cocaine smuggled from Latin America to Europe, and several top army officials are alleged to be involved. Last month, the UN Security Council voiced concern over reports of a rise in drug trafficking since the April coup.

Temudo said food insecurity and debt could easily make farmers more susceptible to political influence, and thus increase instability in the country. She suggested that aid groups change strategy and focus on buying seeds to help farmers diversify.

Farmers could also be helped purchase tractors and other farm implements on credit and later repaid with their cashew harvests.